With apologies to one of the more protective copyright holders out there, the song, (which was intended as a parody of the party culture and turned into a party song itself) fits the repair bill directly. If we don’t stop it, soon nothing will be fixable locally or without great cost of our capital.
Technology is changing our consumption habits. I have clients show me videos of problems that 15 years ago they would have never dreamed of capturing on video and the multiple ways to communicate with one another expand every day.
It isn’t just new apps to snap, tweet, and toc that are evolving. It’s the machines the Ag industry relies upon. The manufacturers know that the operations are getting more efficient and need less iron to cover the same number of acres, so they are looking for revenue streams wherever they can. Repairing those machines is a prime target.
First, printers. Most printers are designed with “bricking” technology that shuts them down after so many sheets run through them, full stop. The “jail break” to make these perfectly functioning machines continue to work past a programing que requires violations of federal copy right protections. Combine this self-imposed wear date with requirements (calibration pages) that are designed to waste ink (which if you consider the price you pay for the volume you get it might be cheaper to print in blood) and create more purchases. One company has reported said they sell ink, and the printers are just a deliver system. Other manufactures simply chose cheaper materials that will wear out forcing a replacement purchase earlier. That’s why everybody has a basement fridge from 1970s and nobody has a basement fridge from the 2000s.
Next, pay to play. BMW is experimenting with selling cars with all the bells and whistles on every frame, and then requiring you to pay for the extras you want. Heated seats, back up camera, defogger swipe your credit card. Can’t pay, freeze away. Same can be done to farm equipment: Didn’t want to pay for the big motor, that’s fine, we will govern down your out put to the base model. It isn’t really a new concept; luxury cars have had hard to acquire tools to fix them for years for the same reason.
Finally, ag equipment. We have heard the story about John Deere shutting off equipment remotely when it was looked in Ukraine. We have heard the fights about trying to keep operators from being able to fix their own equipment.
What happens in response. Farm operators buying eastern European hacking kits to avoid built in restrictions on software. Hackers attacking corporate servers to “jail break” codes to trick the computers on the equipment into thinking they are at an authorized dealer to make repairs.
What happens next? When you bid on that used tractor in 2030, not only are you going to kick the tires, look at the wear points, but also you are going to want to plug in what ever comes after cell phones and check to see if the operating system has been tampered with. Consider the danger of a full throttle tractor when the operator intended to be moving slowly through a pen of cattle. You didn’t want that PTO to actually work, did you? Sorry, your credit card was expired and it’s a holiday in north Africa where our service center is located, find another tractor to unload feed with.
Right to repair legislation is some states are gaining traction (pun not intended but I will take it). New York will require sellers to provide access and resources for owners to repair their own equipment. Ag is not alone in this fight. Hospitals have similar issues repairing equipment that it has to have ready to perform at the drop of hat. Maybe once a more vocal sector of the economy than the rugged individualism of Ag is impacted more change will be on the horizon.
No big secret, life in Iowa is different. Taking a bus or the light rail to work shop or entertainment opportunities is as convenient and as practical and as likely as riding a dragon to those events. We are not among the highest compensated states for a number of professional service providers (Dr., Dentists, Lawyers, engineers, and the like) but also some of our costs of living are less. Basic food, housing and living costs are less in the rural area.
That doesn’t help when we Iowans cross the mighty Mississippi or Missouri rivers and venture to the coasts. The house of mouse and where the wizard lives amusement parks don’t provide a midwestern rate. Nor do the hotels or food establishments. But we have always known that.
Remoteness also doesn’t help on fuel. We are a driving society. We drive everywhere to get anything and to work. It appears that fuel costs for an average household is going up $2500 compared to two years ago. That that comes out of the vacation and capital improvement fund. Or they are going to turn to credit cards and HELOCS (Home equity loans), those are dangerous events that quickly erode financial stability.
Some economists think small communities nearer the employment and shopping centers may see an increase in demand for housing as rural populations grudging relocate to housing closer to the areas that provide the essential services they need. The question is, do they have the capacity and infrastructure, the lots and the incentives to welcome those who might decide a 20-mile drive is more palatable to the wallet than the 50-mile drive? Also, people who live in rural areas generally do so purposefully (whether by lack of resources to leave, family ties, or a desire to stay local). It may not be a mass exodus, but rather a slow migration if at all.
Combine this information with the realization that, while farmers rarely really retire, more than ½ of the 3.4 million American farm operators will be over sixty-five in the next ten years. While they may not want to retire, medical issues, financial concerns and family pressures may get some of these operators out of the driver’s seat in the coming years. The trend seems to be established operations, not new ones purchasing the retiring farmer’s capital assets. The result is even smaller school sizes in some communities as more farms become names on a yield monitor only instead of a household of people who consume and participate in the local economy.
New entrants into farming are rare as the mass transit options, we opened with. Not only is farmland (rent or purchase) rising in costs, but also fertilizer, fuel, seed and chemical are all on the upswing. Yes, weather and war are part of those costs, but the high prices that have offset these issues are not likely to last.
Congress, between grandstanding and gladhanding, is taking a look at barriers to entry and seeing what can be done to get access to capital for the young farmers. It starts with housekeeping at the USDA and perhaps speeding up the “speed of government” to make government backed loans more accessible and easier to obtain, perhaps in advance of actual purchase like commercial banks do. To the local FSA office’s credit, they have worked with bridge loans to allow the elder generation to acquire the ground with traditional financing and then resell to the younger generation when the FSA loans finally get approved.
Conversely, other Congress people are suggesting killing the PLC and ARC programs, removing subsidies for crop insurance and freezing all new enrollments in the CRP. The promise is nebulous tax cuts that will offset these traditional safety net features of farm programs. Those same members of Congress are also trying hard to divorce the farm bill from food programs (school lunch, SNAP, etc). The farm portion of the farm bill has long relied upon food (75% of the spending in the bill- which impacts everybody’s district) to make it pass the sausage making that is legislative action. The Midterms will likely shape the farm bill’s bent, with one party fanatically devoted to slashing government spending and taxes where ever it sees them and the other promoting policy agendas that may not always fit with modern production ag practices.
In a very old Simpson’s episode, the perennial square Martin is running against everyone’s favorite delinquent Bart for class president. Martin points out that the school has asbestos issues and isn’t safe, Bart replies by starting a chant of “MORE ASBESTOS! MORE ABSESTOS!” Which is immediately picked up by his flock of followers.
I think of this clip when the government tells any producer group, they NEED to do something, the result is usually movement the other direction. The USDA wants more oil seed and wheat to counteract shipping and other pinch points in those global markets. The corn market seems to have begun to chant “more corn” instead. Nonetheless, the USDA is kicking the tires on what it can do without a Congressional vote. To that, they are considering extending crop insurance planting deadlines, and offsetting prevent plant penalties to keep ground in production and allowing double cropping in an additional 681 counties. They are also considering allowing CRP early bird release in order to allow early fall tillage instead of waiting until 30 September for expiring contracts. Additionally, money is going to get thrown at fertilizer production and technical assistance for precision ag adoption and at one point, they considered crop loan rates. However, the chant seems to be drowning out these incentives.
The meat industry isn’t missing the chance to make gains in time of crisis by suggesting livestock auction companies to own small and medium packing plants. Hmm… No conflict of interest there at all… It turns out that the Packers and Stockyards act of over a 100 years ago identified that very issue as a conflict of interest and expressly prohibits it but now it appears that harvesting less than 2,000 head per day or 700,000 per year might be okay to let the buyer and processor be the same person. Of note, hogs aren’t really even auctioned off that much anymore and they are already owned from semen to cellophane by the same owner.
Words have meaning, just not the meaning you think or anybody else thinks.
No backbone, no problem!
In a clear case of judicial acrobatics of worthy of Ringling Brothers big top, California appeal’s court has some how extended protection to the western bumble bee, Franklin’s bumble bee, the Crotch bumble bee and the Suckley cuckoo bumble bee) using a statute designed to protect fish and other creatures of the sea. See section 45 of the CA game code says wild fish, mollusk, crustacean, invertebrate, amphibian, spawn or part of them. Bees are cowards and have no backbone. Well, one part of that is true. Therefore, they get rounded up under invertebrates, which science class members would tell you is a 97% of all animal life.
Clearly, word smithing and parsing to get to a desire result, protection of the bees, rules the day. some routine boiler plate language about fish and fish like things has been stretched far (probably b/c they don’t have backbones) to provide cover to the bees. Then again, that is what lawyers do use words made by the legislative branch (which is also filled with lawyers in many cases) against them later.
No doubt, the war in Ukraine has an impact on ag. As this is generated, India has put in a soft ban on wheat produced that isn’t already under contract. That further tightens global supply which makes wheat and as a result, all of its grain family friends, run higher in the market. John Deere still operates its Russian based facility but used GPS location devices to remotely lock access to looted Ukrainian based John Deere equipment. (That prospect is a whole another article waiting to happen, miss a farm operating note payment and have a new, non-movable yard ornament is something ag finance lawyers would likely love to see be thing).
What might not be the obvious connection to ag is the planning and invasion itself and what lessons can be applied to the ag community. First, I am pro Ukraine on this and have been since my dad went on an exchange trip in 1993 to help them calibrate western farm equipment to make the move from collective farming. Having said that, despite the apparent shellacking that Russia is taking, it wasn’t that stupid of a plan from their prospective. Before the invasion, the Ukrainian President had a 31% approval rating with no military background and no long-standing political training. He was no Winston Churchill. He was saddled with a government that still had plenty of Soviet era corruption. The Ukrainian Army had a lack luster performance in Crimea and was bogged down in the eastern front with a static style defense, not a maneuver-based force that modern warfare generally calls for. Polling indicated that up to 40% of the respondents indicated that they would not take up arms in the event an invasion, many of which didn’t think would actually happen. Many citizens spoke Russian as the primary language and had close relatives in Russia. The Russian Army had undergone modernization following their Georgian invasion in 2008 and the results in Crimea and Syria pointed to them adopting to modern tactics techniques and procedures. The result, on paper, was pre-ordained. The proof in the pudding appears to be quite different. Outstanding performance from the president and its highly trained army, citizens that don’t give an inch of ground and massive aid from a previously somewhat indifferent Western Europe along with inept leadership from the Russians with on overrated under maintained and trained military have shaped a far different outcome so far.
Coming up for air from that geopolitical military analysis, what is the connection to ag. Sometimes, things just don’t pan out the way they should on paper. The best laid future plans on succession of the operation, wealth distribution and expansion can and will hit unexpected. Sons and daughters die, divorce and change career goals. Long term landowners who always treated you right go to the nursing home and promises to be first on the hit list to rent or buy go out the window when the out of state niece shows up with a smart phone and a land value calculator app on the phone. Markets change, tornados touch down and the railroad changes its mind on who gets priority shipping. The list goes on.
The ag operator and farm family must both be aware of the only thing constant in life is change and the only thing certain is death, taxes and change. Take the time to review succession plans now. Consider what assets you truly need to continue to hold onto to maintain your operation and lifestyle and which ones are just more gold on the pile. Consider reducing the pile of gold now by strategic gift giving. Contemplate a disaster and what the alternate plan is. Do you have the resources or access to capital to recover? How much property insurance do you have and what does it really cover? Does skimping on coverage to save premium really make sense? What happens if your daughter doesn’t (or does) want to milk cows when you are gone. Do you really care that much about continuing the farm? Do your kids? Is it reasonable to continue to operate the way you operate?
Wills, trusts, rights of refusal and first rights to purchase, LLCs and corporations all have a place at the table depending on these questions and your response. What you do now to shape your battlefield.
Sumner, Iowa Attorney practicing in Iowa primarily in Ag Law, Bankruptcy, Estate Planning, Real Estate Law. Lawyers at the Dillon Law P.C. are dedicated to serving Iowa, including but not limited to the cities of Allison, Charles City, Cresco, Decorah, Des Moines, Dubuque, Elkader, Grundy Center, Independence, Manchester, New Hampton, Waterloo, Waverly, Waukon, West Union & Vinton, and the communities that make up Allamakee, Benton, Black Hawk, Bremer, Buchanan, Butler, Chickasaw, Clayton, Delaware, Dubuque, Fayette, Floyd, Grundy, Howard, Polk, Winneshiek, counties. © 2022 Dillon Law P.C. Sumner Location | 209 E. 1st Street, Sumner, IA 50674 Volga City Location | 502 Washington St, Volga City, IA, 52077. West Union Location | 103 N. Vine Street, West Union, Iowa 52175 West Union, Iowa 52175 We are there most Fridays 10-3 and by appointment. Telephone: (563) 578-1850 Email: firstname.lastname@example.org Home | Attorneys | Blog | Ag Law | Bankruptcy | Estate Planning | Real Estate Law | Contact | Iowa Ag Law Attorney Sumner Taxation Commercial Transactions Production Contracts Labor Hobby Farm Liability Bremer Fayette County Lawyer